Corporate loan market opening up for SMSFs

SMSF access to the corporate loan market is improving and provides another avenue for trustees to access stable monthly income with a low risk of capital loss, according to Metrics Credit Partners (MCP).

“Our ageing population means we are at a pivotal point where the largest cohort of Australians are transitioning to retirement and looking for stable investments that offer decent yields against a backdrop of highly volatile global equity markets and an ongoing low interest rate environment,” MCP managing partner Andrew Lockhart told selfmanagedsuper.

“Despite this shift, if you look at SMSFs, they are overweight in equities, overweight in cash and they have no means to access asset classes that offer lower risk than equities but with higher returns than cash, without the durational risk associated with traditional fixed interest.”

Lockhart highlighted banks had traditionally dominated the Australian corporate loan market, however, non-bank lenders were changing the accessibility for SMSF and retail investors.

“There have been few options for SMSF investors wanting to diversify their portfolio, however, MCP is changing that through its recently launched investment vehicle, the MCP Master Income Trust (MXT),” he said.

“MXT allows SMSFs to invest in corporate loans, an asset class that was previously restricted to wholesale investors.

“MXT was one of the largest initial public offerings (IPO) on the Australian Securities Exchange last year and its 8000 investors come from diverse backgrounds, including SMSFs, retirees, retail clients and high net worth individuals.”

In February, MCP launched an entitlement offer of new units in MXT, the firm’s flagship corporate loan fund.

It is seeking to raise up to $303 million through the offer, which follows the successful deployment of $516 million in funds raised from the IPO.

The entitlement offer closes on 29 March, with allotment of new units due on 9 April.

MCP is a specialist debt fund manager with $2.7 billion in funds under management.

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